February 4, 2014

Every day I get sales calls and emails. Most of them are asking me for money right off the bat and if I said yes to them all I’d be out of business. Whether you’re selling manufacturing services, web hosting, or even your product line wholesale the biggest worry your customer has is that dealing with you might lose her money. I’m not buying ad space on your blog because I might not get any sales and you still get the cash. I’m not buying your product to put in my store because my customers might not buy it from me and then I’m stuck with it. I’m not manufacturing a new product in your factory because it might not sell and I’m stuck with that inventory. That’s the kind of thought every customer has when you try to sell to him or her.

The good news is there are ways you can eliminate this worry from your sales pitch. If you’re 100% certain your customer WILL benefit from your product or service, offer to prove it to them. Here are a few ways you can do it:

1. Money Back Guarantee
If you’re certain your product will sell in a store, make that promise to a potential wholesale customer. Next time you’re talking to a boutique owner you want to close, tell her you’re so sure your product will sell that if she’s not happy with the sales after 30 days you’ll send her a prepaid mailer to return any unsold merchandise and issue her a refund for those items.

This will help ease your customer’s mind because now she knows she can’t lose money working with you. You can try this approach with service based offerings too. If you can’t get people to buy ad space on your blog offer a money back guarantee on the ad space. If you are confident your advertisers will make money working with you, you shouldn’t have any problem with this and it will get you a lot more “yes”.

2. Partnership (We make money if you make money)
Selling something your customer pays for before she sees any benefits is difficult. Another way to circumvent this risk is by offering an arrangement where you only make money if your customer makes money. This is the model Square has adopted. This credit card processor provides its customers free hardware and comes with no service charges. The only fee Square charges is a percentage of sales. So if Square’s customers are selling products and benefiting from their service, Square gets paid. If the customers aren’t selling anything, Square gets nothing too.

You can use this approach for product-based businesses too. If there’s an online retailer you’d like to work with offer to drop ship products as their customers order. That way the online retailer doesn’t have to buy any inventory up front. If the products sell, you and the retailer make money. If the products don’t sell no one loses anything.

This is actually the model I use for my t-shirt printing service DropShipDTG. Since we print t-shirts for designers as orders come in, there’s no need for the designers we work with to spend any money up front. We only make money once they’ve made money.

3. Free Trial
A free trial is a great way to allow a customer to try before they buy. If you’re selling a service, offer that service for free for a week or two so the customer can decide if it is something worth paying for. If you’re selling a product you could consign the items to a retailer for a short period so they can make sure your product line sells before they spend money on it.

This business model is also starting to become trendy with web design/hosting businesses. You’ve probably seen commercials offering to build, host and market your business website for free. The idea is that these all-in-one service providers will do all the work and if you are happy with the finished product you pay them, if you’re not you don’t.

The biggest catch with removing risk from your sales pitch is that you have to be really confident that you’re selling a product that’s going to truly benefit your customers. If you’re just out for a quick cash grab and don’t care about the success or failure of your customers, not only will this approach fail, you probably won’t stay in business very long.

Have you come up with a clever way to remove risk for your sales pitch? Tell us about it in the comments below

August 21, 2012

If you’re a new to running a business the marketing and sales opportunities can be overwhelming. Which ones are good; which ones are a dead end? Here are 3 popular opportunities you will want to consider with caution:

1. Flash Sale SitesWhy it sounds appealing:
Flash sale sites come in so many flavors these days: you’ve got sites like Fab, Gilt Group, Groupon, Living Social, etc. They’ll often come with compelling promises of promoting your brand to millions of consumers and selling a ton of product for you.

What might be wrong with the deal:
These sites are often looking for a below wholesale price from you on your products and they aren’t looking to agree to a minimum purchase. Meanwhile, they’ll want you to set aside inventory you could be selling at full price just for them, and at the end of the sale they will expect you to turn around and ship your goods out within a day or two and it could be anywhere between a few pieces or thousands — either result can be problematic.

What if they only sell a few units? Are you willing to set aside hundreds of units of product you could be selling at full price on the chance the flash sale will call for them? Are you willing to then part with only a few pieces for below wholesale if the sell-through isn’t great?

What if they sell thousands of units? Is it realistic for you to ship out that volume of inventory with a short turn around? What if they are paying on net 30 terms (which means they pay 30 days after you ship)? Can you afford to produce all that inventory you won’t see money on for over a month?

Why you might do it anyway:
Flash sale sites really vary with their models these days. Some do purchase inventory up front, like a regular wholesale customer. Some give you a longer turn around time to deliver goods. While there are plenty of flash sale sites with unfavorable terms, some flash sale site operators are getting wise to the fact that bad terms means it’s harder to get brands to participate and are offering more flexible terms to woo brands.

If you’re in a position to work with the flash sale site terms and can make it a break even or profitable proposition, the exposure can be a huge boon to a brand owner.

2. Consignment
In a tough economy retailers are looking for ways to cut costs. One way they might do this is by accepting your products on consignment. This means they take your products and you only get paid if the products sell. If the products do not sell you can take them back or leave them on consignment until they are sold (depending on the store). If your products sell you will get, on average, about 50% of the retail price. So if your item sells for $20.00 you get $10 and the store owner gets $10.00.

Why it sounds appealing:
If you are having a hard time getting your foot in the door consignment can be a great way to prove yourself to a retailer. It gets your products in the retail space where customers can see them and allows you to beef up your list of stockists.

What might be wrong with the deal:
I’m not a big fan of consignment; here’s how I see it — I’m parting with a product I can sell myself at full price and trusting a retailer will drive foot traffic, merchandise my goods to sell and then actually follow through on paying me. If all goes well, I’m only getting half what I’d get retailing the product myself. All the risk is assumed by me and the reward isn’t substantial enough. Plus, it’s an administrative headache for me to keep track of which stores have which products, how long they’ve had them, whether they’ve sold or not, etc. For a product like mine, with a relatively low price point (my products all retail for less than $50.00) this nickel and dime game isn’t really worth the hassle.

Why you might do it anyway:
There are really only two good reasons to consign your products:
1. You have a product with a high price point and significant margin, for example an expensive bag or art or piece of jewelry AND you found a retail partner who wants consignment terms but also has a storefront with a significant amount of foot traffic and moves a lot of product. If you have that situation consignment might be worthwhile since your retail partner only has to sell a few pieces for you to make money at it.

2. You have a retail partner you want to work with who is on the fence about working with you. You feel your product would sell for them, but they aren’t convinced. You can offer to consign some inventory with them on a trial basis to demonstrate its sellability — but this is really only worth doing if you expect the retailer will convert to wholesale terms once you’ve proven your product will sell for them.

3. Product Reviews
These days you can’t throw a rock without hitting someone who has a blog, and product reviews are a popular way bloggers like to get “paid” for their work. They’ll ask you for a free sample of your product in exchange for writing a review about it.

Why it sounds appealing:
When you’re desperate for publicity any write up can sound attractive. You might also be wooed by the idea of link building if you’re trying to improve your SEO. Bloggers looking for products to review might try to dazzle you with stats on their blog traffic or the size of their mailing list to entice you, making it sound like a pretty sweet deal. Just send them a freebie and get this awesome plug on a blog.

What might be wrong with the deal:
Most successful/high traffic blogs aren’t spending their time soliciting freebies. They already get plenty of offers and are making their money from advertising, affiliate programs or selling their own products. If a blogger is asking you for free stuff, it’s not really “free” for you. You still have to pay for the product and shipping. If you keep sending out product every time you get a request those costs can add up.

You also have to consider whether the blogger actually has substantial traffic and whether the traffic is targeted enough. We constantly get requests for free product from mommy bloggers with only a few hundred readers who focus on blogging about topics like coupons and living on a shoestring. With our youth apparel at a $25 price point, we know we’re not selling a product that appeals to shoestring budgets. These offers aren’t a good match for us demographically speaking, and even if they were, the readership isn’t significant enough to make it worth handing out free products.

Why you might do it anyway:
If your product’s sample costs are low and the sample requests are coming from media outlets that cater to your target audience you might want to consider ponying up the goods. If you sell a product like food or skincare goods, you can probably package samples in a way that makes them cheap enough to produce and ship to reviewers.

While I wouldn’t recommend giving away freebies to everyone who asks, a review on a site with decent traffic that attracts your target market can be quite worthwhile.

March 22, 2012

A common question I see on forums, in coaching sessions, etc is “Why am I not getting more online sales?” I don’t have a magic bullet solution for this problem, but the cause is almost always one of the following issues:

1. Mediocre Products
Sometimes the product itself just isn’t that great. Maybe it’s ugly, maybe it’s unremarkable. We all like to believe our creations are great, but if there’s no market for what you’re selling it doesn’t matter what the creator thinks.

The Fix: It’s hard see our own creations objectively, but if you suspect your products are the problem, test them out at a live event like a trunk show or craft show or festival. Notice how people respond to your products in person. Are they buying? Are they checking the items out? Do people seem enthusiastic about the product line?

If people seem to keep passing your display by or no one is buying then it’s probably time to rethink the product line.

2. Mediocre Website/Online Store
A bad online store is going to make it hard to sell even the coolest products on the web. I feel like I beat this horse to death, but I still see websites every day that just aren’t optimized to convert. I see bad product photos, confusing navigation, poor site copy — the works! Contrary to popular belief, products won’t just sell themselves. If your online store isn’t up to par you’re guaranteed to be losing business as a result.

The Fix: If you know your products are proven sellers (i.e. they do well with wholesale and at live events), it may be time to give your web shop more polish so your items can shine online too. Consider working with a professional designer to make your site look its best. Use a professional photographer for product photos or educate yourself on how to shoot better photos and retouch them in a program like Photoshop. Study up on conversion rate optimization, a topic I frequently obsess about here on Smaller Box. Making sure your site is easy to use and looks professional will turn those site visitors into buyers.

3. Lack of Effective Marketing
If your products are great and your site is top notch but you’re still not seeing sales then the problem is probably marketing. People can’t buy from you if they haven’t heard of you, so it’s important to have a plan to promote your products to your target customers.

The Fix: Create a marketing plan so you know how you’ll get your products in front of customers. Consider incorporating SEO, advertising, publicity, viral marketing, live events such as festivals or craft shows, social media, etc. As you build your marketing plan make sure you’ve thought about how you’ll select and prioritize marketing initiatives and how you’ll measure the results.

Happy Friday! While you’re here, check out my newly beefed up resources page. I’ve added links to a ton of products and services I personally use to run my creative business. I’ll be adding more resources in the coming months so that my readers can benefit from my favorite finds. Many of the vendors I recommend are the result of exhaustive searches to find suppliers with the perfect combination of best price and great products. If you need promotional items, web hosting, domains, graphic design, etc. the resources page has great suggestions.

On a personal note, I’m pleased to announce that an Ex-Boyfriend tee (my clothing company) was featured last week on an episode of ABC’s Modern Family. I’m always touting the benefits of publicity and this placement was a result of hard work from my partner and our PR assistant. (If you want to know how my partner and I do our own PR I’ve written an ebook about it.)

November 17, 2011

It’s no secret: the more people in your target demographic who find your online shop, the better your chances are at making sales. Most of your website visitors are going to come from links or search engines. The good news is these things go together like peas and carrots. The more good quality sites you have linking to your site, the more search engines will favor your site. Inbound links are a top ingredient for search engine optimization.

Now getting 1,000 new links sounds like a daunting task. But what if I told you you could have more than double those inbound links to your online shop by this time next year? Let’s make a new year’s resolution: this time next year you are going to have over 2,000 inbound links to your website if you’re willing to do about 15 minutes of work every day on your marketing. That’s it! 15 minutes/day = over 2,000 links!

Now to start this plan you’ll want to do a little reconnaissance. Start by making a list of sites where you could get links. Here are the categories to consider:

Make your list as extensive as you can, you’ll be referring back to it every day until this time next year when you have your thousands of links. It might take a few hours this week to gather your initial list, but once you’ve got it you’ve basically got your to do list.

Now here’s your regimen:

5 minutes: Posting new content to your website (i.e. a new product, a blog post, etc.). Make sure your content isn’t 100% your products. You also want to produce interesting content so people don’t feel like your site is nothing but a sales pitch. A site with good content is likely to get more attention than a site with nothing but products on it.

6 minutes: Adding your site to a new directory or pitching your site to a blog on your list of blogs to pitch. If you don’t have new content to pitch to a blog, pitch your services as a guest blogger, since guest posting still gets you a link.

That’s all you have to do. If you don’t have new content to share every day, go back through your archives and share an older blog post or existing product on sites that haven’t linked those pieces of content yet. This process should get you about 5 to 6 new links each day. By the end of the year you’ll have over 2,000 new links. You should see a gradual boost in your site traffic, search rank and sales as the year goes on.

ATTENTION ETSY USERS: If you’re thinking about enacting this plan for your Etsy shop, my advice is don’t. If you spend 15 minutes/day marketing, you’ll have dedicated over 90 hours of labor to your marketing by year’s end. All that link juice is benefiting Etsy.com. Do you want to work an extra 90 hours this year to help Etsy be more successful?

I think 100% of your marketing efforts should 100% benefit YOU and only YOU. If you’re going to invest 90 hours of your precious time marketing, do it with your own website so that 100% of the benefits are yours alone. Don’t just take my word for it, leading marketing blog Copyblogger would say the same thing.

July 13, 2011

I get sponsorship requests in my inbox almost daily, and they are usually a variation on the following themes:

1. Buy ad space from me! I get 100 visitors/day and have a page rank of 2.

2. I want to review your products on my blog. I get 1,000 visitors per month.

3. I want to host a giveaway for your products. I have 500 Facebook friends.

DELETE DELETE DELETE!!! I don’t mean to sound like a jerk, but I am trying to run a business and these “offers” suck! They’re money losers for me and I can’t just give away free money all day.

If you’ve been sending out solicitations like this, let me explain the brand owner’s perspective. (If you’re a product-based brand owner, this should be your perspective too, so listen up.)

When I make a decision to advertise or donate free products to something, those decisions cost me money. My advertising budget is hard-earned. My products and postage are not free. So when I am presented with an opportunity to part with my money, I’m going to make that decision on statistical probabilities. Here’s what I mean:

Let’s say an ad costs me $50.00 for 10,000 impressions. If I expect a 1% click-through and a 1% conversion that means I can expect 100 clicks on my ad and one conversion. So the statistical probability is that one sale would cost me $50.00. If I sell a $500.00 product, I might be cool with that. If I sell a $10.00 product this ad is clearly a bad idea.

I might play with the numbers depending on the situation. For example, I know when I do co-op ads, I get a 4% click through rate and a 3% conversion rate. When I get an editorial placement, maybe I average a 3% click-through and a 2% conversion. I can make these estimates based on past performance of other ads or other editorial placements. This information gives me numbers to run different scenarios with so I can make an educated guess about how much a conversion is going to cost me.

So, getting back to those unsolicited sponsorship requests. If I give you a free product to “review” I am paying about $5 in postage and losing about $25.00 of inventory, so this placement is going to cost me $30.00. If your blog receives 5,000 visitors per month, that’s less than 200 visitors per day. Even if your review of my product stays on your home page for 5 days, I’m probably getting less than 1,000 impressions. Even if the placement garnered an unheard of 5% click-through and a 2% conversion rate (again, double the average conversion rate for most ecommerce sites), I’d still be paying $30.00 per conversion. So you can see why, in all statistical probability, your “review” offer is a money-loser for me.

How to get brand owners to say yes to your requests
If you’re running a truly successful blog, you won’t need to spend your days begging brand owners for free stuff. They’ll come to you with offers because you have something to trade. I offer free product for review and giveaways all the time. But I make those offers to publications with millions of readers, because those are odds that are statistically favorable for me.

If you want my products for your contests or just as free swag, you’ve got to have something to offer me that’s worthwhile, and that means a sizeable targeted audience. Spend your time building your readership instead of asking for freebies. The freebies will come when your publication is worthy of them.

Want to figure out the probable results of a sponsorship?
I’ve created a handy conversion calculator that computes the probable results of an ad or sponsorship. If you’re considering buying an ad or giving away a free product, use the tool to determine the probable results of the sponsorship.

If you’ve been trolling for free stuff from brands, you should test out my calculator too. You can supply the calculator with your site traffic info and the average value of the goods you’ve been asking for. My calculator will tell you what sponsoring brands are probably paying per conversion when they accept your offer. Really think about whether you’re actually offering them a valuable opportunity before you keep requesting freebies.

What about secondary conversions?
I harp on secondary conversions a lot on this blog. I am constantly saying that marketing is about more than just sales. I absolutely mean this. That said, it’s a little about sales. If a marketing opportunity is statistically likely to cost a lot more than the value of my sales (i.e. the marketing opportunity costs me $500 and I only expect $50 in sales), then the chances of that opportunity delivering a lot of secondary conversions aren’t great either.

If I’m on the fence about a placement, meaning I feel it’s well-targeted, but the statistics say I will pay $8.00 per conversion when I typically try to pay $6.00 per conversion, I might go for that placement expecting secondary conversions to make the placement worthwhile, but it has to be close to my targeted cost per sale for secondary conversions to tip the scales in favor of a placement.

June 8, 2011

Today I want to talk about the difference between modeling your business around transactions versus relationships. This ties into what I talked about earlier this week with regard to customer lifetime value. First, my post Monday was mostly geared to business models that focus on customer relationships. Not all business models have this as a focus. Here’s are some characteristics that make these models different:

Transactional Business Models

Focus is on getting the sale, not getting repeat customers

Business offers no remarkable brand experience

Business sells mainly utilitarian items that people seek out when the items are needed

Customers are motivated primarily by price

Marketing efforts rely heavily on SEO and programs like Google Adwords, tools that drive customers to the business when customers are shopping for the products they sell.

Here’s an example of what I mean. Last summer we decided it would be nice to string some white Christmas lights around our backyard for evening lighting. We googled “outdoor white christmas lights” and visited sites like Novely Lights and Christmas Lights Etc. I can’t even remember which one I ordered from, probably whoever had the best price. They sold pretty much the same product, and it was the product I wanted. It was also a product I wasn’t going to form a real emotional attachment to or shop for regularly. Trying to form a relationship with me as a customer was probably going to be useless for these businesses and their lack of remarkable branding had no influence on my purchase decision.

If you sell a product like Christmas lights or car batteries, it might make sense for you to focus your marketing on transactions vs. relationship building. You might have some chance of building a relationship as a supplier for a landscaper or mechanic, but probably not with the average retail buyer.

Relationship-Based Business Models

Focus is on getting repeat customers, emphasis on lifetime value of customers, not individual transactions

Business is heavily focused on creating a unique brand experience

Business sells items that people want (instead of need), and shopping behavior can be motivated by new offers or desire for product (i.e. if you sell jewelry, customer is equally likely to buy because they love a new bracelet that was just released vs. needing to get a gift for a friend’s birthday)

Customers are motivated to buy based on uniqueness of product and brand experience (i.e. they can buy a bra any place, but they choose a Victoria’s Secret bra because it looks sexiest.)

Business may sell a type of product many competitors sell, but have a unique spin on the product either via the products themselves or the shopping experience (consider brands like Banana Republic, Nordstrom, Pottery Barn, Hot Topic, etc.)

In contrast with my Christmas lights example, consider a brand like Tiffany & Co. On the face of things they sell jewelry, but that’s not all. What they sell is an experience. They sell the idea of a classic, the ultimate good taste, luxury. Everything about shopping with Tiffanys is an experience from the unique yet timeless aesthetic of their products to the famous little blue box with the white satin ribbon your jewelry is presented in.

My wedding band is from Tiffanys and it does have a different look and feel compared to other jewelry I own. The designer’s name is inscribed inside the band, along with the famous Tiffanys logo. The ring has a heavier weight to it and it doesn’t look like a ring I’ve seen any place else. You can say a ring is a ring and tons of places sell them, but this one is distinct and it’s associated with a distinct brand, which caused me to favor this ring over the alternatives.

When I have a really special occasion that calls for jewelry, something that I want to be remembered, Tiffany’s is the first place on my shopping list because of the brand experience and products they offer.

What this has to do with you
As a business owner, you really have to think about what kind of business model makes sense for you. The kind of model you choose dictates everything from your marketing strategies to your website copy to your products and product presentation. If your focus is transactional, you want to devote your resources to acquiring sales. You need the best SEO and the best Adwords campaigns.

If your focus is relationship based, you need to really think about crafting every aspect of your brand in a way that’s remarkable.

Select a model that is appropriate for products you sell and the kind of business you want to build, and focus your attention on the strategies that are most suitable for your business model.

April 8, 2011

A few personal notes before I get onto the link love goodness this week.

1. Sorry for the lack of posts lately. I switched to a new web hosting company and that was kind of a hectic time-consuming process. Hopefully things will be a little more reliable with the new host, but we’ll see what happens.

2. My online shop is doing a special fundraiser for homeless animals. If you enjoy this blog and want to do me a favor please please tell your friends about my fundraiser (Facebook, Twitter, etc.) and/or order one of our fundraising items. We’ve designed keychain bottle openers and magnets featuring super cute original illustrations and 100% of the money goes to homeless animals. These items are only $6.50 and there’s no shipping charge! Probably cheaper than your average lunch out. So please please help us support this great cause.

A Link Building Blueprint – great tips on building links to your site (Link building is one of the key components of search engine optimization. If you want Google traffic to come calling, get some links!)

February 2, 2011

A popular question I hear is “How can I get more traffic to my website?” This is the wrong question. The question you want to ask is “How can I drive qualified targeted traffic to my website?” Targeted traffic is traffic that’s most likely to convert. These are the people who are most likely to give you money. You don’t need tons of visitors if you’re getting the right visitors.

To give you an example, imagine you sell cat collars. Would you rather advertise in a biker newsletter with 300,000 subscribers for $100 or Feline Wellness Magazine, with a readership of 80,000 for $300.00? On the face of it, you might think biker newsletter, more people and less money. The better option is the cat magazine though. It’s more targeted so you’re more likely to actually sell product.

While the example I’ve given is a pretty easy one to understand, my point is to get you to think critically about where and how you market. You can have 1,000 fans on Facebook, but if you sell jewelry on Etsy and so do your 1,000 Facebook fans, your chances of selling to those people are pretty slim. You can buy an ad on a site that’s read by thousands of Etsy sellers for $10, but unless you sell supplies or educational materials for Etsy sellers, there are probably better places for you to advertise.

It’s nice to feel liked. It’s nice to see traffic coming to your site and get praise from friends on Twitter. All those warm fuzzies can fuel your confidence, but they won’t pay the bills. Marketing a business properly is too much of an expensive venture, both in terms of time and cost, so you want to choose the marketing activities that are going to make you the most money.

Not sure if your marketing activities are making you money? Check out my new book on Google Analytics.